UnitedHealth Group Inc (NYSE:UNH, ETR:UNH) shares plunged almost 20% after the health insurance company downwardly revised its full-year profit guidance, in addition to reporting an earnings miss for the first quarter.
The firm now expects adjusted earnings in the range of $26 to $26.50 per share, down from its earlier forecast of $29.50 to $30.
This reflects a sharp rise in care activity in its Medicare Advantage business, especially in physician and outpatient services, surpassing what was expected for 2025 and even exceeding already high 2024 levels.
For the first quarter, earnings per share of $7.20 missed estimates of $7.29 while revenue of $109.6 billion was short of the $111.6 billion expected.
“UnitedHealth Group grew to serve more people more comprehensively but did not perform up to our expectations, and we are aggressively addressing those challenges to position us well for the years ahead, and return to our long-term earnings growth rate target of 13 to 16%,” UnitedHealth CEO Andrew Witty said in a statement.
The company also noted lower-than-anticipated reimbursement projections for Optum Health in 2025, due to minimal 2024 engagement from beneficiaries in plans that are leaving certain markets, along with a stronger-than-expected impact from ongoing Medicare funding cuts affecting both existing and new complex patients.